unafraid. captions by closed captioning services >> free fall on wall street and in markets around the world. a technical correction here. a bad bear market upon us here and the loss of trillions of dollars on paper here. tonight, making sense of the nose dive. plus, a cult leader meets justice. warren jeffs. prosecutors say he sexually assaulted two underaged girls. he says is he a prophet just following god's will. today the judge gave him a lesson in the laws of man extortion by explosives. new clues in the case of a teenaged girl who had what we now know was a fake bomb chained to her neck.

>> it was a-letter attached to this device that did make certain demands. >> shepard: tonight, chasing the suspect. and the police officer who ignored her own safety to help the hostage. plus, buried alive at the beach. a teenager trapped seven feet under the sand. >> you can tell us hurt screaming help. >> tonight, how rescuers and sun bathers all pulled together to pull him out. oh my, what a day as we wait for asian markets to open after the worst session on wall street since the economic collapse of 2008. and the ninth worst ever. u.s. stocks on plunged well over 4% today. officially bringing our stock market into a correction. the dow lost more than 500 points. the nasdaq down more than 130, and the s&p 500 off 60. at one point this year, stocks were up more than 8%.

but, as you can see, we pulled back into negative territory today and just look how hard and fast the market has fallen. since the middle of last month. stocks have lost value in nine of the past 10 sessions. last week was their worst of the year and traders fretted over the u.s. debt crisis. this week, so far, is worse. >> i think investors in general are worried we are headed for recession and they want to get out while the getting is good. >> shepard: investors were already jittery about a drop in consumer spending. also bracing for tomorrow's report on july unemployment with the jobless benefits of so many americans about to expire. but all of this started in europe. three weeks ago in a run on the banks in italy. now, growing worries that italy and spain, big economies might not be able to repay their debts. european stocks tanked today ahead of ours. down more than 3% as the european central bank offered more emergency loans and suggested it might delay an expected interest rate hike this

fall that said to the markets you are on your own and that spread a fear there is a fear index in the united states and it was off the charts today. high unemployment. the credit crisis. shaky financials. stagnant growth. big trouble in europe and nothing obvious to fix it and the eurozone, the economy is bigger than ours. so, today, a flight to liquidity and quality in an economic soup turned sorrow by fear. and tonight concerns a double dip recession could be upon us. neil cavuto live on fox top story from his studios at the fox business network. neil, it's all connected. europe is a big trading partner with china. if europe suffers, we all suffer. >> could i just digress a minute, shep? have you got to come over to fox business network. that's where all in other nerds. it's august the fun. you are right, there is a sort of appal over these markets here that they have no sense of where we are going. and they are frustrated at the pace of government efforts to try to calm things down. you mentioned italy at the

outset here. silvio berlusconi took to the airways look, everything is fine. you don't have to worry about it i don't know what the big deal is we have got our finances under control. that may or may not be the case, but the markets pounced on that as a sense that he did not >> very much so. have you got to keep in mind here. they have not been big lenders. they always argue that they have been punished for lending willy-nilly before the meltdown a few years ago. i always say -- by not lending to anyone. but the fact of the matter is the banks are in a little bit of a pressure cooker here because their own costs, while they are very, very low. interest rates that they could borrow at or near zero.

they could lend out if they wanted to at much higher rates. the fact of the matter is though that their balance sheets are not that great, shep. i don't want to get in to multiples and all of this. but their own financial well-being is in some doubt here. because their balance sheets simply don't look that hot. and why their stocks is i think you pointed out at the outset here have cascaded so far so fast. there is a concern and sometimes it doesn't even have to be justified in reality. that we could face another meltdown and that some of these banks, like bank of america that are presumably too big to fail could be tested. >> shepard: we will see. the total loss in u.s. stocks over the past two weeks almost $1.9 trillion. so the question now is where should we put our money? many people are simply leaving it on the sidelines. and even the commodities which might normally rise on uncertainty today fell. oil, settle below $90 a barrel. after all, a weak are economy

means weaker demand for energy. and then there is gold. it was down and unusually so half a percent as investors worry that the dollar could strengthen. a stronger dollar is actually bad for many u.s. businesses as it puts a dent in profits overseas and stronger corporate profits have been one of the few bright spots in this economy. neil, if you are an average investor, what do you do with your money? >> neil: well, you look for leadership. you really do look for signs that this could be reversing. i covered the 1987 stock market crash and follow-up ones that we have seen over the years in 1989. there was what they called the crasheth at the time a failed leverage. i don't want to bore with you that we saw it in '97 and '98 with the russian and aghts connotation. normally what happens in meltdowns, some are pro-nowpsed. some are just severe. someone dives. in peter lynch in 1987 was buying stock in the middle of october 19th, for example, when we had that big 508 point in the dow.

back then, by the way. similar terms to today's drop but a represented quarter of the dow's value at the time, shep. he dove in, idn dove. in g.e. dove. in started buying back stock. we have yet to see that because all of this happened so quickly, so rapidly, but until you see that my advice, generally to folks is don't you be the brave one. have someone step ahead of you. >> shepard: as i mentioned, neil, the recent stock market drop of more than 10% puts us in a technical correction. is this the market's way of predicting our economy is headed back into a recession in a phrase if you could? >> i don't think so. i think we are in a correction. we are not quite at their market territory. the market, as much as i love it, isn't a great predicter though. >> shepard: watch for you 4:00 eastern on fox news channel. and then again at 6:00 p.m. on the fox business network just up the dial. the white house saying again today it does not think we are headed for a double dip recession it insists the economy will keep growing this year. but the president is admitting he would like to pick up the

pace when i said change we can believe in, i didn't mean change we can believe in tomorrow. not change we can believe in next week. we knew this was going to take time. we knew the road ahead was going to be difficult. that the climb was going to be steep. i have to admit i didn't know how steep the climb was going to be. [ laughter ] >> shepard: speaking at a fundraiser last night in chicago, the white house says he is planning more road trips this month to focus on turning around the economy. our main man at the white house is ed henry. he is live there tonight. what's the reaction there on this nose dive? >> shep, there is light music playing behind me because on the south side of the building the president is having a little 50th birthday party in the rose garden. this, as you can imagine, is not the gift he was expecting for that birthday. have you got the dow diflg. diving. debt soaring. unemployment numbers coming in tomorrow that wall street and myspace street are bracing for to see whether or not the jobs picture has gotten even worse. we have herd -- heard this

president blame part of the problem on president bush. now to expand the finger pointing and now point to some other factors that are dragging down this recovery. take a listen to jay carney. >> there is no question that we have -- this economy has faced head winds this year, a variety of them, including the earthquake and tsunami in japan. the increase in oil prices, energy prices that resulted from the unrest in the arab world, and the situation in europe also. >> i pressed jay on whether or not there were -- american people saying look you are not taking responsibility you are blaming it on all these other factors. >> he said no we are not blaming it on those factors. we are just pointing out the climate that is not good right now european debt crisis, et cetera as you know. heading into 2012, they are going to have to start owning this in a way that shows that they have got a plan to deal with it.

>> shepard: plan, i haven't heard this plan. what's the plan to add jobs? >> well, look, jay carney will say the president, and he is right has created about 2.1 million jobs since he took office. the problem is the layoffs have obviously outpaced that job growth and we are in negative territory. bottom line they say the president wants to work on patent reform that will help some companies create jobs. he wants a payroll tax cut that will put 1,000 bucks in the average family's budget. things like that. those are things that will help on the margins. that's not going to be some huge driver of job creation like he hoped from the stimulus. debt deal the government doesn't have the money to do something big as jay carney said today. if there were a silver bullet, they would have used it by now, shep. >> shepard: ed henry live at the white house. some comers are corporations are reporting large profits. they are not doing a lot of hiring. what's happening with all that corporate cash. that's ahead inside fox report. plus, verdict in the sex assault trial against the cult leader warren jeffs. he is accused of preying on

children, having sex with a 12-year-old, bringing in a crowd to watch and recording it as god's will. what did the jury think of that? the verdict is next from the journalists of fox news on this thursday fox report. ben and his family live on this block. ben's a re/max agent, and he's a big part of this community. re/max agents know their markets, and they care enough to get to know you, too. nobody sells more real estate . visit remax.com today.

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>> shepard: the cult leader warren jeffs is guilty of sexual assaults on children from as young as 12. that as a jury in texas reached the verdict about 90 minutes ago after about three and a half hours of deliberations. they were set to start considering his punishment almost immediately. warren jeffs is the leader of a secretive religious, unquote, cult called the fundamentalist church of jesus christ of latter day saints. it preaches that warren jeffs himself is god's own prophet. today, when it came time to defend himself, the heavenly spokesman said very little. court observers gave warren

jeffs 30 minutes to give closing arguments. he spent most of the time staring at the floor while the judge counted out the minutes outloud. before the time expired, we're told warren jeffs told toward the jurors and finally mumbled something like i am peace. whatever that means. this is a man who prosecutors say had sex, group sex with young children. brought in grown people to watch and recorded it all. if jeffs were not god's prophet, people might just call him a sickening pervert. and today in texas, that's exactly what a jury did. trace gallagher with the latest developments from our west coast news hub. how much time is this man going to spend locked up? >> he is facing 119 years in prison, shep. he could guess less time. he will almost certainly spend the rest of his life in jail. now, before the jury delivered their verdict, they asked the judge for two things. one for court transcripts which the judge said. no and, two, to re-hear audiotapes including the tapes of jeffs allegedly raping the

12-year-old girl. the prosecution says jeffs recorded that tape secretly, in a church with other people present. it walls clearly the most shocking evidence evidence in the trial and may have been the key. minutes after the jury reheard that tape, they convicted warren jeffs. shep? what about chances of appealing this thing. problem according to our own legal experts was he didn't get much of a defense even though it was own defense. >> yeah. but he never denied the charges. never even addressed the charges. most legal experts say it was enormous mistake by defending himself. today, after he called his first witness and the witness left the stand, the judge said mr. jeffs, call your second witness. he stayed silent. after three minutes the judge then rested his case, and some think that might leave some room for an appeal, listen. >> three minutes is not inordinate amount of time. he has continually asked for

continuances. i believe to a certain extent this judge has been a little bit heavy handed with a defendant who is not represented by anyone. >> maybe a little heavy handed. but that said, a successful appeal remains a very big long shot. shep? >> trace gallagher in los angeles. thanks. police say they are trying to break down masked intruder, chained a fake bomb to her neck. happened yesterday in sydney, australia. the video here shows paramedics wheeling that child into the hospital after that ordeal. for hours and hours. no one knew whether the bomb is real. we're told the 18-year-old was afraid to move at all that whole time and her parents say she held up beautifully. i can tell you we as parents are extraordinarily proud of maddy, she is woken up this morning in pretty good spirits. tired, sore from holding this damn device in place for hours.

>> shepard: credit for risking her life to stay with the teenaged girl before the bomb next to young maddy for hours on end with no protective gear at all. she had no idea whether she might blow up any moment. the sydney morning herald newspaper reports the suspect left a long typed note warning young maddy that the bomb would detonate if she did not follow instructions. there was no ransom note as we once heard. so far few clues to that man's identity. today in no, a man accused of killing a child and slicing him up entered a plea and the plea he entered causing major controversy. just ahead, new developments in the grizzly cases that has stunned america's largest city and has parents reconsidering whether to even let their children walk alone. the photos that have scientists wondering whether there could be life on mars after all. so what are these photos? we'll show you what they found on that planet surface just

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>> shepard: a man accused of kidnapping a little boy, cutting his body into pieces, appeared in court today and pleaded not guilty. prosecutors say levy aaron kidnapped an 8-year-old child as he the boy walked home from day camp. the first time the kid made the trip by himself. surveillance cameras there approaching aaron for help when he couldn't find his way. and instead of helping, police say aaron killed him. killed him and then stuck some of the boy's body parts in a suitcase and his feet in his freezer. "the fox report's" correspondent jonathan hunt is at the courthouse where this went down in brooklyn, new york. the prosecutors, i guess the defense lawyers, jonathan this

man hears voices and all kinds of other things. tell us what happened in. courtney: appointed psychiatrists have ruled despite levy aaron apparently hearing those voices he is indeed confident to stand trial. his own lawyers say that will have no bearing on whether they decide to pursue an insanity defense. listen. >> we will wait until our psychiatric experts evaluate him and find out what their answers are. and if they tell us that there is a psychiatric defense, then we will present it to a court. >> >> meantime, the prosecution say they want to pursue this trial as quickly as possible. the ada released a statement today which said in part and i quote "i want to reaffirm that this case will go to trial and that there are absolutely no circumstances which would lead me to accept a plea bargain. levi next's court date has been

set for october, shep. >> shepard: a confession letter and we saw it for the first time today. what was in it? >> it made for deeply disturbing reading, shep. in it, levi aron talked about meeting the little boy when he asked for directions to his home. he then apparently took him to a wedding that he was attending. then went back home with levi. that's when he panicked, he killed the boy, dismembered the body. disposed of parts of it in his refrigerator. parts in his suitcase which he took to a dumpster. shep, he ends that confession letter by saying, and i quote. "i understand this may be wrong, and i'm sorry for the hurt that i have caused. "shep? >> shepard: jonathan hunt on a story that has shocked new yorkers. water may be flowing on the surface of mars. we got that word from nasa

scientists today. they studied the latest mission from recovery. previously found evidence of ice on mars. this is the first time that they are seeing signs of water on the martian surface. the evidence comes in the form of thin shadows that appear on martian slopes in warmer months. they say as far as they can tell those shadows appear to be liquid water. this is all the more exciting for them because scientists consider water a key building block for life. the battle over raising the nation's debt limit is not over by a long shot. house and senate leaders already moving on to the next stage when they will turn things over to that super committee thing. we're live in d.c. and, word of a break through now in a standoff that shut down the federal aviation administration. thousands of workers, tens of thousands of contract workers. and millions of your tax dollars on the line. we have had a big turn. we'll report it to you and have the bottom of the hour headlines

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>> shepard: a whale of a rescue to tell you about in california where dozens of people scrambled to save a teenager after he dug a 7 feet deep pit in the sand and that pit collapsed around him. it happened in newport beach. amateur video here. witnesses say the teen was playing around in that pit when the walls just gave way. firefighters lifeguards and others at the beach rushed in to help buckets and board and all the rest. after 30 minutes of digging they

finally got him out of there. >> helplessness you feel when you are under the ground. it is like you think you can just pull yourself out but you can't it's so heavy. >> shepard: the kid said after the walls caved in he thrashed about to get some breathing room and passed out thinking he was going to die. we're told tonight he is doing just fine. i'm shepard smith. this is "the fox report." it's the bottom of the hour, time for the top of the news. and wall street is there. stocks plunged today on concerns about the european debt crisis and our own, the dow falling more than 500 points and as analysts focused their attention on europe, we also got some fresh signs that our own economy is sluggish, at best. a trade group reported retail sales went up last month but only after slow demand for stores to slash their prices. meantime, the feds report the number of people who were fresh out of work last week fell but just barely.

the labor department reports the number of first time jobless claims was down by 1,000 from the week before. the number has been stuck at or above 400,000 since the start of april. but we'll learn much more about where we are about to go tomorrow, when the labor department releases its monthly report on u.s. employment. sandra smith from the fox business network with us. that's going to be key. >> this is key for the markets right now. shepard, i can't say it enough. i mean, the markets fell more than 500 points today. the markets are going to be hinged on what these numbers are these are the numbers to watch. economists right now are forecasting 85,000 jobs to have been added in the month of july. the unemployment rate is expected to hold steady from june at 9.2%. so we're really looking at that 85,000 jobs. because, guess what, that would be a big improvement from the dismal 18,000 jobs that we saw added in the month of june. the markets are going to be hinged on this. shepard, these numbers still wouldn't be great. economists say we need to see

over 200,000 jobs added a month just to move the needle on that unemployment rate. >> shepard: fear, not panic the word of the day. the jobs situation is puzzlees to some when you consider that corporate profits seemed to be strong. yesterday we got earnings reports from corporations, enormous. >> record. >> shepard: they are hiring people in other countries, not here. >> that's exactly right. i mean we saw spectacular earnings from some of the biggest companies in this country. apple profits were up 122%. caterpillar profits soared 39%. you cannot argue that the corporations are not making money. but, shepard, a lot of that is because our dollar is so weak. and profits overseas are soaring. that's not going to create jobs in this country. aside from that fact alone, shepard, the ceos of these major corporations are saying not in this environment are they willing to hire. there is too many uncertainties looming about health care and taxes and too much regulation. it's a difficult environment even with those record profits and record amount of cash on

balance sheets. it's still they say to hire right now. >> shepard: dollar stronger today against the oil and the yen. commodities a lot cheaper. sandra smith, thanks. congress getting ready for the next round in the battle over raising the nation's debt limit. leaders of both parties have two weeks now to choose these members of this so-called maybe constitutional super committee to recommend the next round of spending cuts. in a new "u.s.a. today" gallup poll more than 40% of americans say they think the debt deal will make the economy worse. look at this. just 17% say they will make it better. but, unlike other washington commissions, officials say this super committee will get action one way or the other. mike emanuel our man on capitol hill. what did doo we know about how this committee is going to work, mike. >> shep, great focussen othe types of lawmakers' pick. the top lawmakers on capitol hill will select three people each. six republicans, six democrats. they need to, by thanksgiving, find about $1.5 trillion in savings. for more on the super committee, take a listen.

>> it's extremely important that i pick people who are willing to make hard choices but not locked. >> in i think they will be mature enough act in the best interest of the country. also, frankly, they are not going to want to fail for their own reputations. >> the congressional leaders have an august 16th deadline to name those who will serve on the super committee. shep? >> shepard: mike, we just mentioned it, tell us will get action. they are going to get action because this time there are major consequences. >> that's right. serious across the board cuts kick in if congress doesn't agree by december 23rd there are concerns about national security, which could be slashed by as much as $600 billion. one of those worried, connecticut senator joe lieberman. >> god forbid the special committee doesn't make a recommendation that's accepted by congress. the president is going to have to make recommendations of cuts in spending on defense that will disseminate our national security. >> there will also be pressure on democrats because at least 15

provisions of the president's health care law would be on the chopping block in the triggers, the enforcement mechanisms despite efforts to shield the law. shep? >> shepard: congressional correspondent mike emanuel on capitol hill tonight. by the way, the government reports our total national debt is now almost as big as our gross domestic product. that's all the goods and services that the entirety of the country produces. experts tell us that has not happened since 1948. the feds barred more than $200 billion this week after president obama signed the bill to raise the debt limit so. our total debt is now more than $14.5 trillion. just a few trillion shy of our entire economic output at the end of the second quarter of the year. nothing like a public scolding to get some action, apparently. congressional leaders say they have cut some sort of deal to get the f.a.a. up and running again. the lawmakers took off for vacation without running to end the two week shutdown. the president says that put thousands of americans out of work.

stalled tens of thousands of construction workers' jobs and cost all of us millions and millions of dollars a day since nobody was on staff to collect the airline taxes. the bill could have gotten to 1.3 billion. yesterday the president called for congress to end the shutdown this week transportation secretary kept up the pressure today. >> congress is on vacation. they are getting their paychecks. let's do the same for other americans. this is not fair to the american people. >> shepard: a few hours later we learned there is an agreement and doug mckelway has the details live from washington. hello, doug. >> hey, shep, the answer to this apparently was in the hands of transportation secretary ray la hood all along who had the authority to grant waivers to some small airports that would have lost their subsidies under the bill. he exercised that waiver and what la, a deal, f.a.a. workers obviously pleased. >> make my mortgage this month. i'm very happy to make that that's a good thing to be able to pay your mortgage. i'm just like everybody else.

i have three cars that don't work well. i couldn't have gone six weeks. >> senate majority leader harry reid issued a statement late today that read, quote: i am pleased to announce we have been able to broker a partisan compromise between the house and senate 74,000 transportation and construction workers back to work: that often repeated figure of 74,000 workers idoled was exaggeration all along says economist who crunched the numbers of that a third. 24 thundershowers. a lot of politicking going on in recent days. a lot of it probably unnecessary, shep. imagine that in washington. >> shepard: imagine that, doug mckelway in washington, d.c. tonight. devastating famine in east africa has killed nearly 30,000 children in somalia in the last 90 days. figure is stunning from the united nations that more will likely die with more than a half million children starving right now and acutely mal-nourished as

one woman there put it death is inevitable. she says she had to bury four of her children in less than 24 hours. we're told they starved to death. as the family traveled in search of aid. humanitarian organizations have been struggling to deal with the heart breaking fallout of the drought said to be the worst to hit the region in six decades. a militant group which controls much of southern somalia has denied that there is a famine. has severely restricted access to aid groups so the helpers can't get. in vice president biden's wife jill will visit neighboring kenya this weekend. as part of a u.s. delegates going to assess the situation. as the worry is millions are in deep trouble. a public arts project in the had shadow of the 9/11 memorial. documenting the personal accounts of those near ground zero as they lived through that dark day in our history. we'll hear their stories ahead in our continuing coverage of the rise of freedom. plus, the leftovers now of

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>> shepard: tropical storm emily tropical storm no more. broken apart at least for now. forecasters warn it could pick up in the next few days. before they downgraded emily to low pressure system it pounded parts of the dominican republic and haiti. keep in mind more than half a million people in haiti are still homeless after last year's earthquake. emily's intense rain and flooding damaged homes. port-au-prince live from port-au-prince. >> shepard, what we don't see right now in port-au-prince, haiti, are buses filled with evacuees moving to higher ground and shelters. instead, what we see really are houses like this. little tents here that they put some plastic heating and garbage bags on top and put rocks on

tried to tie those down. that's what the government is telling these people run up to the storm, tie the tents down with rocks. that's the best we can see being done here. a man going around with a loud speaker. no one taking refuge or moving to higher ground. in defense of themselves. even though the storm has lost some of its power as it has moved over the mountains, some real concerns about rain in places it could become torrential rain, anywhere from 12 to 20 inches in the best case scenario, that's going to create simply a health hazard, a real disaster in a place where cholera is raging. it could expect to see some flash floods as well as mud slides while the government has been able to do little, there are 12,000 u.n. peace keeping troops on hand. if there are mud slides, they will be the people pulling people to safety. shepard, back to you. >> shepard: steve harrigan live, port-au-prince tonight. the rise of freedom now. our cameras have been following

the rebuilding at the world trade center site for many months. nearly 10 years after the deadly attacks, the question still comes up again and again. where were you on 9/11? for those who actually smelled the smoke and saw the flames in person, that question is particularly poignant. ♪ ♪ >> survivors running for their lives after the attack on the twin towers. >> take your -- get out of here alive. let's go. >> shepard: thousands taking refuge in the battery, a park on the tip of manhattan overlooking the statue of liberty. today, that same park, home to a public art project that pays tribute to everyone who lived to tell about that day. >> i tried to create a configuration that had the absence of the towers. it's kind of like the gos of the

towers here. >> artist creating a mural of hand drawn cards. each one telling a different story. my wife missed it by 15 minutes. all we could see was flames. 10 years and my tears are still falling. the collection put together by the tribute wtc visitor's center. that's a ground zero museum dedicated to the person-to-person history of 9/11. >> we found that there are very very few new yorkers that want to come into a museum that tells the story of 9/11. >> so volunteers hit the streets asking new yorkers to jot down their memories. >> i can still remember the smoke and the smell, and the flame coming up out of the ground. >> we were all shell-shocked on 9/11 and the days and weeks afterwards. we have persisted and moved forward over the past 10 years. >> 9/11, a time of suffering, but a time of national regroupment. >> this woman came down,

especially to be able to write something. her final line that she wrote is now with reconstruction of one world trade center, we finally see new life downtown and in our hearts. >> shepard: new life. the history project on display outside. today only. but the entire thing will remain in the tribute center's permanent archives for generations to come. another story on the rise of freedom next week on fox report. you can see the entire series on our web site, foxbusiness.com/freedom. -- fox news.com/freedom. >> take one for the team but at what cost? two top military officials today speaking out on the dangerous cuts in defense spending. is it really? details on the debt threat next. plus, a woman and her son head to the store and end up in a terrifying position, face down on the floor. men with guns just a few feet away. the rest of the story coming up. and in news from another channel, when you get a little

older your hair gets gray. [ male announcer ] this is the network. a network of possibilities. excuse me? my grandfather was born in this village. [ automated voice speaks foreign language ] [ male announcer ] in here, everyone speaks the same language. ♪ in here, forklifts drive themselves. no, he doesn't have it. yeah, we'll look on that. [ male announcer ] in here, friends leave you messages written in the air. that's it right there. [ male announcer ] it's the at&t network. and what's possible in here is almost impossible to say. i don't know. the usual? [ blower whirring ] sometimes it pays to switch things up. my - what, my hair? no. car insurance. i switched to progressive and they gave me discounts for the time i spent with my old company. saved a bunch. that's a reason to switch. big savings -- it's a good look for you. [ blower whirring ]

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>> shepard: got to cut somewhere. if the cut is happening at your place, you don't like it. with that in mind. congress doesn't come up with a way to cut the deficit. the nation's security will be at risk. or that's the warning from the secretary of defense. he says the debt limit bills doomsday feature triggers unacceptable cuts in spending. >> if it did happen, it would result in a further round, a very dangerous cuts across the board. defense cuts that i believe would do real damage to our security, our troops and their families. and our military's ability to protect the nation. >> shepard: well, secretary panetta also said the country does not have to choose between fiscal responsibility and national security. of course, they could just cut a

little bit. jennifer griffin at the pentagon. jennifer, this is an example of smoke and mirrors when it comes to defense budget cuts or what is it? >> well, in a word, yes, shep. the pentagon, the building that plans for every contingency says it is not planning, in case the lawmakers do not come up with a plan by christmas and that sequestration that's the punishment figure in which the defense department would have to pay another $500 billion in cuts. >> i'm not even beginning to consider what would happen with regards to sequestration. >> the pentagon budget has doubled since 9/11, shep. >> shepard: the pentagon's expensive weapons program could be affected, right? >> that's right. take a listen to chairman of the joint chiefs admiral mike mullen. >> i think programs that can't meet schedule, that can't meet costs, their costs and schedule

requirements are very much in jeopardy. >> that could be bad news for the f-35 joint strike fighter the stealth jet that is being developed. we went to see its first public test flight on friday. on tuesday, yesterday, the pentagon's largest weapons program the f-35 was grounded due to power problems. >> shepard: billions lost in afghanistan. and missing somewhere. maybe they can put a curtail on that. jennifer griffin live for us. jennifer, thank you. cameras captured two suspects in a violent armed robbery. but the cops say they have caught only one of them. and it tops our news across america. >> utah. police say this surveillance video shows the two suspects grabbing cash from registers at a salt lake city market while a terrified young mother and her child lay on the floor. cops say the suspect also pistol whipped a woman out of camera range. texas. more than 100 firefighters battling flames at two homes

near the fort hood army post. crews evacuated 19 houses. officials say nobody got hurt but the fire destroyed those two homes as well as some cars and boats. new york. a tour bus rolling over upstate in whitney point. 40 people hurt. four of them seriously. police investigating the cause. there have reportedly been at least 10 rollover bus crashes in the u.s. since june. many of them in new york and new jersey area. >> california. he is not your typical 8-year-old. is he a hero. the san jose fire department honoring him for saving his best friend's 3-year-old sister from the bottom of a swimming pool. >> i got them and i got her after i pushed her to the side. >> i feel kind of proud. >> shepard: making him an honorary part of the department. >> fox across america is brought

to you by union pacific. >> shepard: so business contracts don't sign those after several hours of drinking. especially if you are the mayor of a city and you get your, well, your whole city into legal trouble if you do. the tipsy mayor and all his troubles straight away. an accident doesn't have to slow you down. with better car replacement, if your car is totaled, we give you the money for a car one model year newer. liberty mutual auto insurance. is this the year you take the trail less traveled? then you belong at bass pro shops for the fall hunting classic. it's our biggest sale and show of the year, with huge savings on great gear. and free seminars by top pros. your adventure starts here. in one place. ♪ the front-row tickets you never bought. the lucrative investment you never made.

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no, man, it's from outer space. they're aliens on an intergalactic cleanliness mission. they're here to clean up the universe. oh, the kitchen scrubbers are aliens, too? yeah, look at that greasy tchen mess. everybody's in on the cleanspiracy, man. i can't even trust myself. [ male announcer ] mr. clean magic eraser kitchen and bath scrubbers. the clean is t of this world. the frontline plus killing force is there annihilating fleas and ticks. ♪ visit completekiller.com and get a coupon for frontline plus. it's the cleanest, clearest water. we find the best, sweetest crab for red lobster we can find. yeah! [ male announcer ] hurry in to crabfest at red lobster.

the only time you can savor three sweet alaskan crab entrees all under $20, like our hearty crab and roasted garlic seafood bake or sn crab and crab butter shrimp. [ jon i wouldn'tut it my table at home, i wouldn't bring it in. my name's jon forsythe, and i sea fd differently. >> shepard: mr. mayor all liquored up. the mayor of a small new mexico town admits he had way to much to put it as he put it right before he signed nine contracts with a california design firm. now that company is suing the city of sun land park for a million bucks after the city cancelled those contracts. here is the mayor. we're told that in a deposition he said he had spent two or three hours drinking with executives from that company before he signed those contracts. town officials say their city council never approved any such a thing and he says is he sorry. nfl players making it official voting to ratify new collective bargaining agreement that allows the games to begin.

now we're learning that as part of the new deal the nfl will become the first of the major u.s. professional sports leagues to use blood testing for human growth hormone or hgh. but only after the union okays the testing. and an appeals process. fox urgent. the tokyo stock market is about to open for trading. what happens in asia and in europe over the next few hours could determine what sort of day we'll be in for tomorrow. this comes after u.s. stocks were in the tank today. traders pulling their money out of the market in response to concerns about the stability of the economy in europe and beyond. the dow off more than 500 points. all gains for the year erased. stocks have fallen more than 10% over just the past couple of weeks. now we are in a technical correction. tomorrow, the labor department is scheduled to release its monthly employment report detailing how many jobs our economy has added or lost last month. and that could do it. stay with fox news and fox

business network for complete coverage tomorrow. and on this day in 1944, the nazi gestapo captured the jewish teenager ann frank after she had spent more than two years in hiding. frank had been staying with her family and four other people in a secret annex above the amsterdam warehouse where christian friends brought them food and supplies. it was there that an frank wrote her now famous diary. three days after she made the last entry the gestapo arrived and carried her off to a concentration camp where disease killed her nine months later. informant had tipped off the germans but they never found the diary. it went on to become one of the most widely read books in all the world even though the nazis caught its author 67 years ago today. and now you know the news for this thursday, august the 4th, 2011. i'm shepard smith. thanks for having us